On November 30, 2016, the Oregon Court of Appeals upheld the application of an anti-assignment clause in an insurance policy where the assignment arose from the insurer’s refusal to defend or indemnify rather than from a judgment against the insured. In doing so, the Court of Appeals addressed the effect of ORS 31.825 on the anti-assignment clause.
In Clinton Condo. Owners Assn. v. Truck Ins. Exchange, 282 Or App 484 (2016), Clinton Condominium Owners Association (“Association”) sued a window washing company, We Do Windows, Inc., for negligence and breach of contract. We Do Windows was insured by Truck Insurance Exchange, which declined to defend or indemnify We Do Windows. We Do Windows assigned its claims against Truck Insurance Exchange to the Association as part of a settlement. The Association then filed this action. Truck Insurance Exchange brought a summary judgment motion, which the trial court granted on the basis that the anti-assignment clause provided that an insured could not assign any rights or claims under the policy without consent from the insurer, and that an anti-assignment clause was not rendered unenforceable by ORS 31.825. The Association appealed.
The Oregon Court of Appeals cited Brownstone Homes Condo. Assn. v. Brownstone Forest Hts., 358 Or 223, 363 P3d 467 (2015), to hold that ORS 31.825 is limited to “allowing an insured to assign excess judgment claims.” It reasoned that, because the assigned claims brought by the Association arose from Truck Insurance Exchange’s refusal to defend or indemnify We Do Windows, and not from a judgment against We Do Windows, the anti-assignment clause applied and the trial court rightly granted summary judgment dismissing the action for lack of standing.
 ORS 31.825 provides that “[a] defendant in a tort action against whom a judgment has been rendered may assign any cause of action that defendant has against the defendant’s insurer as a result of the judgment to the plaintiff in whose favor the judgment has been entered. That assignment and any release or covenant given for the assignment shall not extinguish the cause of action against the insurer unless the assignment specifically so provides.” (Emphasis added).
Soha and Lang attorneys are available to assist insurer clients in understanding and addressing the impact of this decision both during the claims handling process and after an allegation of bad faith claims handling has been made.
Disclaimer: The opinions expressed in in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.